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16 December 2009

Project suspensions at Thai industrial zone discourage investors

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Thailand’s Supreme Administrative Court’s order suspending 65 investment projects in the Map Ta Phut Industrial Estate may lead to a decision by local and foreign investors to shift their investment base out of the estate, state news agency TNA reported, quoting a top securities executive.

Dr Kongkiat Opaswongkarn, Chief Executive Officer of Asia Plus Securities, said the problems at Map Ta Phut will affect Thailand’s economic conditions next year and have continued repercussions for the next decade because it signals that there are risks for investment in Thailand.

The decision is alarming to investors because it means that investment projects could be suspended despite having earlier received a green light for implementation.

Foreign investors planning direct investment in Thailand might shift to other countries, Dr Kongkiat said. Even local investors might also do that.

The situation, if allowed to go unabated, would undermine Thailand’s competitiveness and make the country’s economy grow only by 3 per cent next year compared with the 5-6 percent expansion other countries would enjoy.

“Thailand needs direct investment to create new jobs, distribute products, and substitute imports. Should direct investment be suspended because local and foreign businesspersons are worried about investment risks,” he said, ”there may be a shift of investment into other countries by prospective investors.

“While other countries are trying to make themselves attractive to foreign investors, Thailand is making a different thing. It is a big question that needs to be settled,” he said.

Dr Kongkiat added the Map Ta Phut problems would have a continued impact on the investment sentiment in the Stock Exchange of Thailand (SET) since major companies listed on the exchange such as Thailand's oil and gas conglomerate PTT and Siam Cement made substantial investments in the estate.

Stocks of the two firms have a large market capitalisation. Should stock prices continue to drop, it would depress the price/earning ratio of the market, he said. 


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